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From smart contract risk to cannabis testing mandates, this edition of Risk Wrap highlights six developments shaping compliance, governance, and insurance exposure across high‑risk industries.
Attackers Exploit Unverified Smart Contracts for $36.7 Million
Unverified smart contracts are becoming an increasingly popular target for attackers. A long-standing debate in the crypto industry weighs up whether publishing smart contract source code improves security or gives attackers a roadmap. Most major DeFi protocols choose transparency, verifying their code on blockchain explorers like Etherscan. Others keep contracts closed-source to limit scrutiny.
However, hiding code doesn’t guarantee protection. Threat actors are increasingly reverse-engineering unverified contracts to uncover weaknesses. According to Chainalysis, over the past six months, four attacks targeting unverified smart contracts resulted in losses of around $36.7 million (shown below). Some exploits stemmed from vulnerabilities that had existed for years.
A few factors are driving this trend:
- AI-powered tools are making it easier to identify vulnerability patterns at scale.
- Verified contracts are regularly examined by researchers, auditors, and developers, creating an additional layer of oversight that closed-source projects miss out on.
- Some protocols excluded unverified contracts from their bug bounty programs, reducing opportunities for ethical hackers to identify flaws before attackers could exploit them.
Every unverified contract is a potential target and relying on obscurity alone is becoming less effective.
Implications for brokers and their clients:
- Consider obtaining cyber and crime insurance to help cover incident response costs, forensic investigations, legal expenses, and losses resulting from theft or fraud.
- Consider smart contract failure insurance to cover losses resulting from contract logic issues, improper deployment, and oracle interactions.
- Investigate dedicated digital asset and web3 insurance to cover the above risks and other exposures.
Source: Chainalysis (June 9, 2026). The Hidden Code Problem: How Unverified Smart Contracts Are Becoming a Preferred Target for Attackers.
Emerging insurance industries mentioned: Digital Asset and Web3 Insurance.
Lines of business mentioned: Cyber Liability Insurance, Crime Insurance, Smart Contract Failure Insurance.
Latest OpenAI Death Lawsuit Adds to Growing Wave of Claims
On June 11, 2026, a new lawsuit was filed against Open AI by a Canadian mother on behalf of her 24-year-old daughter, Alice Carrier, who committed suicide with the support of ChatGPT.
The suit alleges that over 18 months of conversations with the chatbot, Alice discussed suicidal ideation 41 times without intervention. It further alleges that ChatGPT encouraged her suicidal thoughts and advised her to continue talking to it rather than to the people around her.
The lawsuit claims that OpenAI made “deliberate design decisions” that contributed to Alice’s death rather than helping to prevent it. Alice had Borderline Personality Disorder, which made her particularly vulnerable to prioritizing engagement with the chatbot over safety.
According to the filing: “Not once did OpenAI alert a crisis provider. Not once did OpenAI notify Alice’s family. Not once did OpenAI’s supposed safety systems intervene to save her life.”
Testing of the GPT-4o model was compressed into a one-week period due to competitive pressure. Previous models underwent testing over the course of months.
The case is one of more than 18 lawsuits the company now faces alleging wrongful death or serious injury.
Implications for brokers and their clients:
- Assess whether existing product liability coverage extends to AI-related harm and consider specialized protection where AI systems are not classified as products under local law.
- Consider tech E&O coverage for allegations that AI systems failed to perform as intended, including failures of safety, monitoring, or intervention mechanisms.
- Investigate AI insurance tailored to the technology’s key risks and the regulatory landscape in each jurisdiction.
Source: International Business Times (June 12, 2026). Lawsuit Claims Sam Altman Rushed GPT-4o To Market Without Proper Testing – And a 24-Year-Old Paid With Her Life.
Emerging insurance industries mentioned: Artificial Intelligence Insurance.
Lines of business mentioned: Product Liability Insurance, Tech E&O Insurance.
Healthcare AI Liability Uncertainty Spurs Calls for Urgent UK Reform
The UK’s Medical Protection Society has called on the government to introduce legislation that would subject healthcare AI systems to strict liability. The government has invested heavily in expanding the use of AI in the NHS, but the surrounding legal framework hasn’t developed at the same pace, creating uncertainty when AI-assisted decisions result in patient harm.
Consider this hypothetical example. A 69-year-old woman with atrial fibrillation had been taking warfarin long-term under the supervision of her physician. She reported a brief episode of diarrhea and vomiting that had since resolved. Her most recent blood results were then put into an AI system designed to support dose titration, which recommended an increase in dose. The physician followed that advice.
The next week, the patient experienced gastrointestinal bleeding. Surgery and an ICU stay was required. The symptoms were attributed to the dose increase and the patient filed a claim against the physician. In this scenario, many would argue that even though the physician was responsible for following the recommendation, liability should be shared with the software vendor.
In jurisdictions where AI systems are recognized as products, product liability laws may provide a basis for claims against vendors. That’s not the case in the UK, which limits patients to making clinical negligence claims.
The EU has sought to address this issue through reforms to its Product Liability Directive, which classifies certain AI systems as products. UK regulation is being reviewed, and industry stakeholders have emphasized the need for a more urgent response.
Implications for brokers and their clients:
- Consider tech E&O coverage for claims arising from inaccurate AI-generated clinical recommendations that contribute to patient harm.
- Review whether existing directors and officers insurance provides adequate protection for executives against regulatory investigations, governance failures, and claims arising from the development or deployment of AI systems.
- Explore AI-specific insurance solutions that address emerging regulatory, governance, and algorithmic risk exposures associated with healthcare applications.
Source: Medscape (June 9, 2026). It’s Time to Close the AI Liability Gap.
Emerging insurance industries mentioned: Artificial Intelligence Insurance.
Lines of business mentioned: Tech E&O Insurance, Directors and Officers Liability Insurance.
Space Tourism May Become More Accessible — But Questions Over Passenger Safety and Liability Remain
The price of commercial spaceflight is expected to fall as new technologies are introduced and the industry matures. Space tourism will still be a luxury for the foreseeable future, but a more affordable one.
However, operators still need to consider the health risks that may affect customers. Weightlessness puts bones and muscles under significant strain. We also have to consider cosmic radiation, as spacecraft don’t provide 100% protection.
Much more research is needed to determine how these risks can be minimized. There are also important questions about passenger eligibility and how operators should determine who’s medically fit to travel to space.
The existing legal framework lags behind commercial developments, as the Outer Space Treaty of 1967 applies at the national level rather than directly regulating private operators. The EU’s proposed Space Act is one step towards supporting the commercialization of space activities.
Implications for brokers and their clients:
- Space tourism companies may consider obtaining tailored space insurance to protect against losses from accidents and other passenger harms.
- Investigate tailored policies covering operational risks before, during, and post-launch.
- Assess whether existing D&O insurance policies adequately protect executives against regulatory scrutiny and governance-related claims as the legal framework evolves.
Source: CMS Legal (April 21, 2026). Space tourism – A dream holiday or a legal nightmare?
Emerging insurance industries mentioned: Space Economy Insurance.
Lines of business mentioned: Directors and Officers Liability Insurance.
Finland Reveals New Framework for Online Gambling Operators
Finland’s Ministry of the Interior has released new information on the regulatory framework that licensed online gambling operators will have to follow when the market opens in July 2027. There are four new draft regulations which are undergoing consultation until August 5.
The proposed measures include new limits on stakes and losses, and new rules for game design. For online slot games, autoplay functionality would be banned. Each spin would also have to last at least 2.5 seconds, with no option to speed up animations.
The draft rules would require operators to clearly disclose situations where player decisions have no influence on randomly determined outcomes. Prize claim deadlines would be standardized, and players would have to be asked every 15 minutes whether they want to log out or continue (this wouldn’t apply to peer-to-peer casino games).
Stake and loss limits would vary according to the type of game and the player’s age. Online slot players under 25 would be restricted to a maximum stake of €10 per spin. For over 25s, the limit would be €20 per spin.
The government has also suggested introducing mandatory return-to-player ranges:
- 70-99% for slots and casino table games.
- 55-80% for online betting.
- 50-70% for daily-draw betting games.
Implications for brokers and their clients:
- Consider tech E&O insurance in case software errors result in non-compliance with any rules introduced.
- Consider professional indemnity insurance to protect operators against allegations that responsible gambling controls, player protection measures, or compliance processes were inadequately designed, implemented, or monitored.
- Investigate tailored gambling insurance that protects against the risks associated with player liability, payment fraud, and regulatory compliance.
Source: Focus Gaming News (June 12, 2026). Finland online gambling regulations revealed.
Emerging insurance industries mentioned: Gambling Insurance.
Lines of business mentioned: Tech E&O Insurance, Errors and Omissions Insurance.
Cannabis Testing Dispute Triggers Vape Recall
A cannabis manufacturer in Kansas City has had hundreds of vape pens recalled following concerns over product testing procedures. The company claims the issue is a result of “evolving” testing requirements, but regulators have stated that the rules haven’t changed.
State regulations require testing to be conducted on the finished product that consumers will use. However, Certificates of Analysis allegedly show that the affected products were tested as bulk THC concentrate before being loaded into vape cartridges.
Ross Bearman, director of laboratory operations at Fleur de Lis Analytical Laboratories (which has no connection to the firm), said that regulators have advised testing labs that manufacturing licensees are responsible for providing products in their final form for testing.
Implications for brokers and their clients:
- Consider product recall insurance to cover the costs associated with recalling non-compliant products.
- Consider product liability insurance to protect against claims alleging that a cannabis product caused bodily injury, illness, or other harm to consumers.
- Investigate dedicated cannabis insurance solutions that address the above, along with other critical sector-specific risks.
Source: Missouri Independent (June 12, 2026). Missouri vape recall exposes dispute over cannabis testing rules.
Emerging insurance industries mentioned: Cannabis Insurance.
Lines of business mentioned: Product Liability Insurance.
